A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.90 per unit. The marginal revenue of the 151^st unit of output is A)-$5.10. B)-$0.10. C)$2.45. D)$5.10.

Question

Quizplus · Accepted Answer

The marginal revenue is the change in total revenue from selling one more unit. Selling 150 units at $10 each gives $1500. Selling 151 units at $9.90 each gives $1494.90. The change in revenue is $1494.90 - $1500 = -$5.10.

A Monopoly Firm Can Sell 150 Units of Output for $10